Rewards and loyalty programs in e-Commerce – Customer Loyalty program ideas for growth

Customer Loyalty
Rewards Program
Customer Experience
Marketing Tactics
Data Analytics

Table of Contents

Planning to scale your e-commerce business? Then you should know about rewards and loyalty programs that can increase your margins and get a more substantial, loyal customer base. Establishing and maintaining customer loyalty is paramount. The best loyalty programs in e-commerce are designed to recognize and reward existing customers for their steadfast support. These rewarding ecommerce customers programs come in various forms, each tailored to foster a sense of belonging and appreciation.

In the competitive e-commerce landscape, ecommerce loyalty programs are a powerful tool to reward customers, turning one-time shoppers into long-term advocates.

What are rewards programs in e-commerce?

E-commerce and loyalty programs reward the best loyal customers. These customers are the ones who have stayed faithful to the brand for a certain period. Some e-commerce brands ask for a membership fee to join their loyalty programs. In contrast, others give it out for free once a customer satisfies specific purchasing criteria.

Loyalty and rewards programs are a tried and tested method to improve your loyal customer base and improve your profit. These programs can be used to:

  • Encourage and increase repeat purchases
  • Boost your profit
  • Promote word-of-mouth marketing tactic
  • Showcase customer appreciation
  • Increase customer retention rate
  • Build a loyal customer base
  • Reduce the marketing cost

How do loyalty programs boost your e-commerce business growth?

Loyal customers are the base of any business. The higher the number of loyal customers, the more benefit it benefits your business. Not only will there be a steady increase in profit, but it will also pave the way for new customers through word-of-mouth marketing. A successful loyalty program goes beyond discounts; it's about creating a bond. To achieve this, businesses often employ customer loyalty program software that helps them track and manage their initiatives effectively. These ecommerce loyalty rewards program platforms enable companies to offer a wide range of incentives, ensuring that their customers feel valued and motivated to keep coming back.

Here's how loyal customers increase your profit:

Customers who become eligible for loyalty programs or join loyalty memberships are those who are satisfied with your product. This encourages them to purchase more and earn more benefits. With a loyalty membership, you can reward them with countless offers and gifts to thank them for their loyalty.

Further, they will be compelled to stay with your brand for an extended period and be interested in your new launches.

Statistics reveal that if you can increase your customer retention rate by just 5%, you can increase your profit by 25 to 95%. Retaining customers via these loyalty programs is also easier than gaining new ones.

A loyal customer's value is higher than a new customer's.

Loyal Customer Value or LCV can be easily calculated using the formulae:

LCV = AOV x Transaction x Time

AOV = Average Order Value (higher for returning/loyal customers)

Transactions = Average number of transactions carried out by a customer in a certain period

Time = the average number of periods a customer actually purchases from your brand/store

How to carry out loyalty programs for e-commerce business

If you are an e-commerce entity, then there are quite several ways to carry out your loyalty and rewards programs for customers:

1. Loyalty benefit upon reaching X value of the purchase

You can reward your returning and loyal customers by awarding them a membership upon reaching a particular order value. Once they get to the cumulative order value, you can award them a loyalty membership that gives them extra discounts and benefits on each purchase. This will not only prompt them to purchase more from you, but also they will indeed preach the word about how the membership gives them extra value on each purchase.

2. Loyalty membership for an initial fee

Find that a customer has been purchasing from you frequently. You can offer them a membership for a fair price that gives them access to more benefits and early entry to site-wide sales. In this case, you will have to actually provide them with a taste of the membership benefits as a trial period so they will be motivated to join it.


Final Thoughts

Both of the above ways work, and various brands and e-commerce sites have proved their efficiency.

You can decide what would best suit your business. You can also reward your customers with different badges that give them varying levels of discounts on their next purchase. This reward scheme is best to increase the purchase frequency as people will be motivated to purchase more to get a higher-level badge that rewards them.

Figure out what works for your business and then implement it. With that said, if you were to award membership benefits or loyalty badges to all customers who purchase from you, then you may not get the benefits you expect.


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